Dick O”™Hare first realized the potential of the Internet in 1992, when some media old-timers still looked at beepers and one-hour photo shops as high-tech.
O”™Hare was working in sales for CMP Media, publishers of the now-defunct NetGuide magazine, when he first visited the CIA website. He used Mosaic, a browser that predated Internet Explorer, clicked through the site, and realized how large an Internet audience could be. The future could mean a digital gold rush for both publishers and advertisers, he thought.
“You could see the potential,” O”™Hare said during a recent interview at the Stamford office of Local Yokel Media, the digital ad platform he launched two years ago. “But, there was a lot of overexcitement in those days.” Anticipating the shift, but not establishing proper business models, led to the dot-com boom of the late 1990s and its subsequent bubble bursting.
Today, that gold rush still hasn”™t come. With metrics like click-through percentages now available, advertisers are looking for more immediate returns on Internet ads than they would have received from traditional print ads.
And as larger news publications cut the size of their staffs and print circulations as their ad revenues deflate and their audiences migrate to online, they”™ve pulled back on local coverage. The one area of growth has been on the hyperlocal level, as smaller publications and blogs pop up to fill in the cracks that have opened in the coverage of larger, daily newspapers. Various estimates say there are anywhere between 6,000 and 10,000 hyperlocal news blogs and 17,000 independent community newspapers in the country.
The question has been how to monetize these industry shifts. O”™Hare may have the answer, though he shrugs off being the guy who figured out online advertising.
“We aren”™t aiming to be the silver bullet,” he said. “We just want to be really good at the niche we”™re focused on.”
The niche of hyperlocal publications became O”™Hare”™s focus after stints with DoubleClick, AOL Media Networks and Yahoo Inc. over the years. What he realized, he said, were opportunities to improve how an ad reaches its intended audience.
The company has both a supply and demand arm to its business model. First, it aggregates a list of hyperlocal websites, blogs and the sites of community newspapers, and then organizes them by ZIP code. Then, it matches up advertisers with publications based on the intended audience, going further than simple “geo-targeting” of an audience in a certain geographic location.
For publishers, Local Yokel aims to be the next best choice to selling their own ads. For advertisers, the company aims to offer an effective way to find customers that is transparent and where ad buyers aren”™t left guessing which sites their ads will appear on.
“In essence, what we are building is a marketplace,” O”™Hare said, adding that working with hyperlocals gives a more authentic approach to sales. “We think hyperlocal publishers are pillars of their communities.”
The business model can be attractive to national advertisers as well, who may want to announce the opening of a new store locally, for example. Meineke and L.L. Bean are among some of the larger companies who”™ve become clients. A strong creative team can help the company grow in terms of national clients, O”™Hare said.
Growing won”™t be a problem in the short term. In the past year, the company has increased its publisher base by 800 percent and upped revenue by 250 percent. New clients on the publisher side include Hersam Acorn newspapers in Fairfield County and DNAInfo.com, a local news site covering neighborhoods in New York City and Chicago.
On June 18, Local announced it had closed its first institutional funding round, having raised $2.15 million from Connecticut Innovations, the Connecticut Department of Economic and Community Development and Gold Ridge Asset management, a private equity and investment firm.
O”™Hare and the company are at “the right place at the right time,” according to David Audibert, managing director of investments for Connecticut Innovations, a quasi-public corporation that provides financial assistance to grow the state”™s economic and tech base. “By 2016, more than one in every four ad dollars will be spent on digital media,” Audibert said. “We expect Local Yokel Media to be part of that mix.”
A recent report by BIA/Kelsey predicts the online and digital segment of the U.S. local media market will grow from $21.2 billion in 2011 to $38.1 billion in 2016, according to Greg Sterling, of Sterling Market Intelligence and Opus Research. “This is a giant opportunity that has been waiting for a scalable platform and approach,” he said.
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